Childcare subsidy cuts to hit middle and low income families, warns Early Childhood

The federal government is under fire for a budget change that will deprive families of $230 million in childcare subsidies over the next four years.

The income eligibility threshold for the Child Care Benefit will be frozen for three years from July 1, saving the budget $33 million next financial year, rising to $77 million by 2017-18.

Overall spending on childcare subsidies will reach $28.5 billion over the next four as the number of children enrolled in formal childcare swells. But the new freeze on the indexation of eligibility thresholds for childcare support means $230 million less will go to parents than would otherwise have been the case in that period. The savings will be "redirected by the government to repair the budget and fund policy priorities," the budget papers say.

Samantha Page, the chief executive of peak group Early Childhood Australia, called on non-government parties to block the changes in the Senate.

"Childcare fees have risen 7 per cent on average over the past decade, well above indexation, meaning that childcare payments are already losing real value over time," she said. "These changes will put pressure on low and middle income families."

Greens childcare spokeswoman Senator Sarah Hanson-Young said the government should be pumping money into childcare, not making cuts. "Ripping more than $200 million out of the pockets of Australian mums and dads is not the way to fix our nation's broken childcare system," she said.

The Greens will oppose the changes in Parliament, Senator Hanson-Young said.

Assistant Education Minister Sussan Ley said maintaining eligibility thresholds for the Child Care Benefit at the current levels would help ensure these payments are "sustainable" in future. "It's key families remember we've also tasked the Productivity Commission with finding ways to make childcare more affordable, flexible and accessible and restored $12.6 million for occasional childcare that Labor cut," she said.

The Labor government curbed the growth of the separate Child Care Rebate by capping its upper limit at $7500. The rebate pays half the annual out-of-pocket costs of childcare users up to that amount. Ms Ley said families may still be eligible for the Child Care Rebate, which is not means-tested, if their income exceeded the Child Care Benefit threshold. Parents affected by the latest changes to the Child Care Benefit might receive more assistance under the rebate.